1) US inflation hits 40-year high with larger-than-forecast gain
U.S. consumer price index jumped by 7.5% in January, higher than the forecast of 7.3% by economists, while representing the fastest pace since 1982. The rise in consumer price followed a 7% annual gain in December.
Shelter is the single biggest player of CPI (33% of Index) with rents soar 18% over the last year, while home prices jumped 19%.
2) U.S. Treasury yields topped 2%
U.S. Treasury yields topped 2% on Thursday after key inflation data showed higher-than-expected price pressures.
The 10-year Treasury note surged to 2.035%, breaching the 2% level for the first time since August 2019. Meanwhile, the 2-year Treasury bond continued to increase by 26bps and topped 1.6%, marking the biggest 1-day move since 2009.
3) Markets pricing 100% probability of 50bp hike in March
Markets are now pricing 100% probability of a 50bp rate hike in March after the Federal Reserve Bank of St. Louis President James Bullard said he was open to a 50bps rate hike in March and a full percentage point by July. Meanwhile, markets also see Fed Funds Target Rate at 1.77% by year-end.
4) OPEC sees upside to 2022 oil demand amid economic recovery
The Organization of the Petroleum Exporting Countries (OPEC) said that global oil demand might rise even more steeply in 2022 as the world economy shows a strong recovery from the pandemic. OPEC expected oil demand to rise by 4.15 million barrels per day this year, unchanged from its forecast last month, following a steep rise of 5.7 million bpd in 2021.
World consumption is expected to surpass the 100 million bpd mark in the third quarter, noted OPEC.
